Is it normal for NQM lenders to charge 8% closing costs?

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Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
4y
Quote from @Eliott Elias:

It's getting kind of crazy. I was charged $8k on a 112k DSCR refi.


If the broker charges 2 points. That would be $2240. They may charge a processing fee of $450 (that's low, but...).  The lender will charge anywhere from $999 and a point to $1995 at par for underwriting depending on the lender.  Which lender usually depends on your particular circumstance.  Using the more expensive option, you're at $4809 in lender/broker charges.  If your taxes are $2500 per year and insurance is $1500, that's another $4000 for escrows before the title company and prepaids, so I can see $8,000 on a $112,000 loan.

On a conventional loan, you may not pay points because they're built into the lender paid comp, but your underwriting fee will be around $1250.  Add that to the $4000 in taxes and insurance and then title charges and you may be close to $8000.

Closing costs aren't that much more now than they were 3 years ago; in some cases, they're less.

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  • Lender · Charlotte, NC · Member since 2022 · 739 posts · 410 votes
    4y

    Hi @Account Closed, no. That is not normal. They will typically charge anywhere from $1,000-$1,500 in admin/underwriting fees.

    Then, 2-3% in origination fees. The other closing costs should be pretty standard (title fees, recording fees, etc.)

    8% is really high though. You should get a second opinion.

    Let me know if I can be of any assistance.

  • Rental Property Investor · Inlet Beach, FL · Member since 2018 · 199 posts · 111 votes
    4y

    @William Hinsche

    Closing costs? Like transfer and deed tax and lender title insurance?

    Or they have 8٪ lender charge?

    Or is that the broker compensation?

    What section of the Closing Disclosure are these fees under?

  • Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    It's getting kind of crazy. I was charged $8k on a 112k DSCR refi.

  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    4y
    Quote from @Account Closed:

    Is it normal for NQM lenders to charge 8% closing costs for purchasing investment residential 2-4 SFHs?


     You're obviously conflating 8% in total closing costs including escrows, to 8% that goes directly to the non qm lender.  Big difference. 

  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    4y
    Quote from @Eliott Elias:

    It's getting kind of crazy. I was charged $8k on a 112k DSCR refi.


    If the broker charges 2 points. That would be $2240. They may charge a processing fee of $450 (that's low, but...).  The lender will charge anywhere from $999 and a point to $1995 at par for underwriting depending on the lender.  Which lender usually depends on your particular circumstance.  Using the more expensive option, you're at $4809 in lender/broker charges.  If your taxes are $2500 per year and insurance is $1500, that's another $4000 for escrows before the title company and prepaids, so I can see $8,000 on a $112,000 loan.

    On a conventional loan, you may not pay points because they're built into the lender paid comp, but your underwriting fee will be around $1250.  Add that to the $4000 in taxes and insurance and then title charges and you may be close to $8000.

    Closing costs aren't that much more now than they were 3 years ago; in some cases, they're less.

  • Rental Property Investor · Inlet Beach, FL · Member since 2018 · 199 posts · 111 votes
    4y
    Quote from @Stephanie P.:
    Quote from @Eliott Elias:

    It's getting kind of crazy. I was charged $8k on a 112k DSCR refi.


    If the broker charges 2 points. That would be $2240. They may charge a processing fee of $450 (that's low, but...).  The lender will charge anywhere from $999 and a point to $1995 at par for underwriting depending on the lender.  Which lender usually depends on your particular circumstance.  Using the more expensive option, you're at $4809 in lender/broker charges.  If your taxes are $2500 per year and insurance is $1500, that's another $4000 for escrows before the title company and prepaids, so I can see $8,000 on a $112,000 loan.

    On a conventional loan, you may not pay points because they're built into the lender paid comp, but your underwriting fee will be around $1250.  Add that to the $4000 in taxes and insurance and then title charges and you may be close to $8000.

    Closing costs aren't that much more now than they were 3 years ago; in some cases, they're less.

    This is a good explanation; I was just posing the leading quesitons.
    Cash-to-close and closing costs are not the same. Lender closing items are not the same as title closing items.

    You can shop lenders, and you can shop title companies (unless it's stipulated in the purchase contract that seller picks title company).
  • Lender · DFW · Member since 2022 · 2 posts · 1 vote
    4y
    Quote from @Eliott Elias:

    It's getting kind of crazy. I was charged $8k on a 112k DSCR refi.

    Was that just for origination/lending closing fees or all fees (title, escrows, etc.)?
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